April ISM Manufacturing Index Shows Contraction

U.S. manufacturing contracted in April for the second straight month, the Institute of Supply Management reported Thursday, leaving its index at its lowest point since October 2001.

The factory index declined to 45.4 last month from 46.2 in March. Any reading below 50 indicates contraction. Economists had expected a reading of 47.2, Bloomberg reported.

Manufacturing is one of trucking’s largest and most important customers. Many economists are expecting business activity to increase as the year goes on, Reuters reported. The war with Iraq and high oil and motor fuels prices have been blamed for the slow start to 2003.

Meanwhile, the Commerce Department said Thursday that U.S. construction spending fell 1% at an annual rate in March to $868.5 billion, the steepest decline since August.

The pace of residential construction climbed 0.1% to $454 billion, but private spending slid 3.5% on reduced government construction of housing, hospitals and prisons.

ISM’s report showed the first back-to-back readings below 50 since an 18-month span ended in January 2002.

The new orders component of the report, which is considered an indicator of future production, fell to 45.2 from 46.2 in March. The production index rose to 47 in April from 46.3.

The employment index declined to 41.4 from 42.1, while the inventories index rose to 42.7 from 42.3, indicating inventories are being run down at a slower pace, Bloomberg said.

ISM is based in Tempe, Ariz. The manufacturing index is based on surveys of purchasing and supply executives of more than 400 companies in many different industries.